| Cities exist to make our communication and economic | | | | flattening of the bid rent curves for firms and |
| exchange easier. The dense concentration of | | | | households as the importance of transportation costs |
| people and firms within cities lowers the cost of | | | | and direct communication is reduced. |
| trading, as the market is easily accessible to the firm | | | | Alternatively, the regional restructuring perspective |
| and vice versa, firms have access to an extensive | | | | puts the emphasis on firms' decisions rather than |
| labour market and workers can find employment. | | | | worker' residential preferences, it emphasises the |
| People and firms locate in cities because it reduces | | | | importance of businesses following outsourcing |
| their transport costs either to take goods to market | | | | strategies. Firms selectively relocate employment to |
| or to travel in order to buy goods (Ioannides et al. | | | | the urban periphery, cities further down the urban |
| 2007). Cities that have been easier to transport | | | | periphery or internationally. |
| goods to have often been the most successful, for | | | | The increase in demand for interaction and faster |
| example, many of the major cities in Europe are | | | | mobility, new business practices such as Just In Time |
| ports. This concentration of factors necessary for | | | | ordering and the casualization of work, through |
| trade can also be seen to occur within cities. The | | | | increasingly contract based and part time |
| monocentric model shows that cities tend to radiate | | | | employment, enabled by the development of |
| out from a central point dominated by commerce, | | | | computer technology have led to increased traffic |
| this is because the centre of the city is where | | | | through commuting, travel and freight (Audirac, |
| access to the market is easiest and transport costs | | | | 2005). This has meant that many major cities have |
| are lowest. This can be shown using simple bid rent | | | | experienced traffic and congestion problems causing |
| curves. We assume that firms will bid more to | | | | firms situated within the city to re-locate to urban |
| locate in or close to the CBD than households. | | | | peripheries in order to benefit from improved |
| This means that firms will occupy the centre while | | | | connectivity. |
| other uses such as housing are located further from | | | | So why do agglomerations of firms and employment |
| the centre. The monocentric model assumes that if | | | | occur on the periphery? Castells (2002) believes |
| transport costs are lower then firms will locate | | | | that firms locate in areas in which they have the best |
| further from the centre, therefore employment will | | | | access to other businesses and cities in international |
| not be as intensely concentrated in urban centres. | | | | networks, this means they have to locate near to |
| There has been rapid technological development in | | | | motorways and airports which are often located in |
| Information and Communication Technology (ICT) | | | | urban peripheries. It is also necessary for firms to |
| over the last twenty years which has impacted on | | | | attract highly educated employees, they do this by |
| many areas of modern life (Castells, 2002). Comin | | | | locating in attractive areas, often outside of cities, |
| and Hobijin (2004) illustrate this development using | | | | but close enough that their employees can access |
| data on changes in personal computer and cell phone | | | | the benefits of the city or in gentrified suburbs. On |
| ownership, the EU went from less than 5 million PCs | | | | the other hand, Storper (1997) believes that firms |
| in the early 1980s to 100 million in the late 1990s and | | | | have “untraded interdependencies” such as |
| nearly no cell phones to more than 150 million. How | | | | tacit knowledge. This is particularly important in the |
| has this technological development, dramatically | | | | computer technology industry and other young |
| reducing communication and transportation costs as | | | | industries as firms get distinct benefits from working |
| well as leading to the development of new industries, | | | | in an environment where they can share knowledge |
| affected employment location in cities? | | | | to solve problems. |
| Taking the monocentric model's assumptions to their | | | | The emergence of new factors which mean that |
| logical conclusions it could be argued that computer | | | | some firms are more attracted to peripheries of |
| technology spells the end of cities as the spatial | | | | cities means that the appearance of the firms bid |
| scope of knowledge spillovers is expanded so that | | | | rent curve will change. Firms which have not been |
| less one on one interaction is needed. Employment | | | | as affected by computer technology advances are |
| will be spread over a larger distance as firms locate | | | | likely to retain bid rent curves favouring centres but |
| more evenly in space to take advantage of lower | | | | firms attracted to the periphery will have bid rent |
| rents and congestion costs (Ioannides et al. 2007) | | | | curves that have firms clustering at the centre as |
| Ioannides et al. write that “Such changes could | | | | well as on the periphery. |
| lead us to predict the death of distance. That is, to | | | | References and Suggested Readings |
| suggest that location will no longer matter and that | | | | Ioannides, Y., Overman, H., Esteban, R. and |
| economic activity will, in the near future, be evenly | | | | Schmidheiny, K. (May 30, 2007) The Effect of |
| distributed across space” (2007, pp.2). This | | | | Information and Communication Technologies on |
| argument was refuted by Gasper and Glaeser | | | | Urban Structure, Preliminary version of a paper |
| (1996) who argued that although technology will | | | | prepared for the 46th Panel Meeting of Economic |
| replace the need for some personal interactions, the | | | | Policy in Lisbon, October 2007 |
| main effect of ICT will be to increase the demand | | | | Castells, M. (2002) An Introduction to the Information |
| for personal as well as virtual interactions and that far | | | | Age in The Blackwell City Reader, ed. Bridge, G. and |
| from leading to dispersal the new technology | | | | Watson, S. Blackwell, Oxford, pp.125-134 |
| industries were creating their own clusters in areas | | | | Comin, D. and Hobijin, B. (2004) Cross Country |
| such as Silicon valley. | | | | Technological Adoption: Making the Theories Face the |
| Audirac (2005) identifies two main strands of thought | | | | Facts. Journal of Monetary Economics, Gasper, J. |
| on the effects of ICT on urban form: the urban | | | | and Glaeser, E. (1996) Information technology and the |
| deconcentration and regional restructuring research | | | | future of cities. Wroking paper 5562. Cambridge. MA: |
| traditions. The urban deconcentration perspective | | | | National Bureau of Economic Research |
| argues that residential preferences for low density | | | | Audirac, I. (2005) Information Technology and Urban |
| living, along with rising affluence and ICT advances, | | | | Form: Challenges to Smart Growth. International |
| mean that cities will experience decentralization which | | | | Regional Science Review, 28, 2, pp.119-145 |
| disperses employment and population to the | | | | Storper, M. (1997) The Regional World: Territorial |
| metropolitan edge as well as to places further down | | | | Development in a World Economy. |
| the urban hierarchy. This would be equivalent to a | | | | |